Poverty Rate

THE U.S. CENSUS BUREAU defines poverty rate as the percentage of people (or families) who are in poverty. The concept of poverty has no single universally accepted definition. There are three basic definitions of poverty that are used most frequently. These include 1) absolute poverty, 2) relative poverty, and 3) social exclusion.

The absolute (or extreme) poverty approach would identify an individual or family who does not have sufficient resources to maintain a healthy lifestyle, and is based on a predetermined income level. Relative poverty identifies a more subjective approach to determining the living standard. For example, poverty may be defined as the number of households earning less than 30 percent of the median income.

The concept of social exclusion is a relatively new approach to measuring poverty. Social exclusion would take into account the manner in which poor people and families would not have the same degree of accessibility to the positive attributes of the socioeconomic system as would more affluent people. Such things as employment opportunities, adequate housing, and high-quality health services would not be as accessible to the poor simply because of their poverty status.

One of the most frequently used definitions uses a measure of income as a threshold to assign a poverty level. Since it uses a specified income level, this definition exemplifies the absolute poverty approach. An individual or family living below the assigned income level would be classified as living in poverty. For example, in 2004 the poverty rate, or annual poverty rate, in the United States was 12.7 percent. This meant that over 37 million people in the United States were living in poverty. The overall poverty rate masked the rates for individual ethnic groups and age cohorts.

In 2004 the African-American population had 24.7 percent of its people living in poverty, nearly twice the poverty rate of the overall country average. The poverty rate for Hispanics nearly matched that of the blacks, 21.9 percent. At the lower end of the scale non-His-panic whites had only 8.6 percent of their people living below the poverty rate. Asian Americans were slightly higher than whites in that year with a poverty rate of 9.8 percent.

The difference in poverty rates between the youngest and oldest age cohorts in the United States is striking. While nearly 18 percent of children under the age of 18 lived in poverty, a figure nearly half again as high as the percentage for the country, approximately 11.3 percent people aged 65 and above lived below the threshold. In spite of U.S. wealth and affluence, the poverty rate for children in the United States is nothing to boast about. Further, it is clear that the problem of high child poverty rates in high-income countries is not limited to the United States.

A 2005 study by the United Nations revealed that nearly 50 million children in wealthy countries are living in poverty. The actual number of children in the United States living in poverty was estimated to be 13 million in 2004. That number accounts for 26 percent of the total number of children living in poverty in the wealthy countries. Further comparisons of the wealthy countries in this regard are revealing. It is interesting that three of the northern European countries, Norway, Finland, and Denmark, all have child poverty rates that were below three percent in 2004.

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